Investing.com - The U.S. dollar slipped lower against its Canadian counterpart on Tuesday, after data showed that the U.S. trade deficit widened to the highest level since 1996 in March, although a disappointing trade report from Canada limited the local currency's gains.
USD/CAD hit 1.2058 during early U.S. trade, the pair's lowest since April 30; the pair subsequently consolidated at 1.2051, shedding 0.35%.
The pair was likely to find support at 1.2010, the low of April 28 and a three-month low and resistance at 1.2204, the high of May 1.
The U.S. Bureau of Economic Analysis reported that the U.S. trade deficit widened to $51.37 billion in March from a deficit of $35.89 billion in February, whose figure was revised from a previously reported deficit of $35.4 billion.
Analysts had expected the U.S. trade deficit to widen to $41.2 billion in March.
The dollar had strengthened earlier, as recent economic reports indicated that the U.S. recovery had turned a corner after a recent bout of weakness.
In Canada, official data showed that the trade deficit widened to C$3.02 billion in March from C$2.22 billion in February, whose figure was revised from a previously estimated deficit of C$0.98 billion.
Analysts had expected the trade deficit to narrow to C$0.85 billion in March.
The loonie was higher against the euro, with EUR/CAD slipping 0.25% to 1.3446.
The single currency found some support after the European Commission said in its quarterly forecasts that it now expects the euro zone economy to grow to 1.5% in 2015 up from 1.3% three months ago.
The Commission also revised up its forecast for inflation this year to 0.1% from its earlier forecast for a decline of 0.1% and said it expects inflation of 1.5% in 2015 up from 1.3%.
Investors still remained cautious amid eports the International Monetary Fund pushed the euro zone to cut Greece’s debt burden last month, amid fears that its debt is becoming unsustainable.
Athens is scrambling to reach an agreement with its creditors on a package of economic reforms for more bailout funds before it runs out of cash.
Later in the day, the U.S. was to release data on construction sector activity, while the Institute of Supply Management was to release a report on U.S. service sector activity.